Yakub02
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In essence, the term lease payments refer to the payments that a lessee expects to make over a lease term or to the receipts that a lessor expects over the economic life of the asset.
In a straight forward example, the lease payments that a lessee expects to make and a lessor expects to receive are same. However, this is not always the case. The definition of lease payments takes that into account.
Definition: Lease payments Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the following:
(a) fixed payments (including in-substance fixed payments), less any lease incentives;
(b) variable lease payments that depend on an index or a rate;
(c) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine non-lease components with a lease component and to account for them as a single lease component.
For the lessor,leasepaymentsalsoincludeanyresidualvalueguaranteesprovided to the lessor by the lessee, a party related to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee. Lease payments do not include payments allocated to non-lease components.
In a straight forward example, the lease payments that a lessee expects to make and a lessor expects to receive are same. However, this is not always the case. The definition of lease payments takes that into account.
Definition: Lease payments Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the following:
(a) fixed payments (including in-substance fixed payments), less any lease incentives;
(b) variable lease payments that depend on an index or a rate;
(c) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine non-lease components with a lease component and to account for them as a single lease component.
For the lessor,leasepaymentsalsoincludeanyresidualvalueguaranteesprovided to the lessor by the lessee, a party related to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee. Lease payments do not include payments allocated to non-lease components.
